The course weblog for PA5113, State and Local Public Finance, at University of Minnesota

Friday, April 24, 2009

MFIP diluted

Minnesota Family Investment Program is Minnesota’s “welfare reform program,” providing families with children cash and food assistance, typically for a maximum of 60 months. Fact Sheet

MFIP requires parents to work, with assistance designed to be a supplement to, not a replacement for, earned income. The program seeks to accomplish this through several ways, such as not counting a the first 36% of earned income in determining the grant amount. Additionally, families do not lose their MFIP assistance until their income is 15% above the federal poverty line. This number has been continually shrinking over time…The initial trial period, which was from 1994 to 1998 in a limited area (Hennepin, Anoka, Dakota, Mille Lacs, Morrison, Sherburne and Todd Counties) set a cut off at 140% of the federal poverty level.

This flexibility was thought to be one of the program’s key inducers of success. Indeed, MFIP’s dissemination was largely based on early studies, such as Manpower Demonstration Research Corporation’s initial program evaluation, which highlighted this unique attribute.

Taking away this incentive could provide the political benefit of reducing program eligibility and thus participation, but it certainly has a negative effect on families. Indeed, 15% above the poverty line is not at all a self-sufficient level. Such hamstringing of the program would certainly negate substantial investments made into families. If the goal was to transition families off of welfare – limiting eligibility would certainly give the impression of success. However, if the goal is stabilize families, maintaining more families with higher levels of earned income would show real success.